"All-In Online:" Nevada Appeal Special Report
June 26, 2012
For London-based bookmaker William Hill PLC, getting licensed for betting in Nevada was not optional.
Rather, it was essential to moving forward with online gaming ventures outside Europe, according to Ralph Topping, chief executive officer of Hill PLC, Britain’s biggest bookmaker.
After all, the Silver State is the gold standard of government regulation and promises an unrivaled rich vein of cachet in the event of an online gaming rush.
Having won approval from Nevada – for decades, the only place to gamble legally in America – Hill aims to buy companies or form partnerships in South America and elsewhere in North America, he said.
“Nevada is one of the most respected regulators in the world,” said Peter O’Donovan, online managing director of Ireland’s Paddy Power wagering firm, which also has applied for an online gambling license in Nevada.
The Nevada Gaming Commission last week approved Hill’s takeover of a string of more than 160 sports books and betting kiosks in the state. The company acquired the Lucky’s, Leroy’s and Club Cal Neva operations last year for $53 million. About two dozen outlets previously owned by Leroy’s, and 31 owned by Cal Neva, are included in the deal – along with Lucky’s Race & Sports Books, which operate at Casino Fandango, John Ascuaga’s Nugget in Sparks and the Grand Sierra Resort in Reno.
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With the acquisitions, William Hill expects to create 140 jobs at 159 sports betting bars. It will eventually spend $10 million, although not all in Nevada. Among the acquired companies is American Wagering, which is licensed to offer sports wagers on mobile phones within state borders.
And another large player in the European wagering industry, 126-year-old Ladbrokes, has agreed to buy a stake in Stadium Technology, a sports-betting software company.
The firms are eager to ante up because Nevada has an advantage most other states don’t: It has legalized sports betting, with more than $3.2 billion wagered on sports in the state last year. Meanwhile, Americans bet tens of billions of dollars illegally on sports annually, with friends, offshore betting sites, or criminals.
The Professional and Amateur Sports Protection Act, passed in 1992, allows legal sports betting only in Nevada, Delaware, Oregon and Montana. Besides the Silver State, only Delaware has so far taken advantage of that exemption.
Conversely, sports betting in the United Kingdom is so routine that online gambling companies there sponsor soccer teams. That’s almost unimaginable in the U.S.
Sportingbet, an online sports betting company based in the British Crown dependency of Guernsey, sponsors the Wolverhampton Wanderers, a U.K. soccer team that dates to 1877. And Bwin.Party Digital Entertainment, the Gibraltar-based operator of the PartyPoker gambling website, sponsors Real Madrid, one of the world’s most prestigious soccer teams. Both companies are listed on the London Stock Exchange.
Britons can even bet on the NFL, NBA and Major League Baseball – William Hill sets 6-1 odds of the Green Bay Packers winning next year’s Super Bowl. British “punters,” as bettors in the country are called, are nevertheless more likely to bet on tennis or soccer’s Manchester United or Liverpool than on American football.
The NBA and NFL are staunchly opposed to legalized sports betting in the U.S., which means it may expand only slowly beyond Nevada – if at all. In April, the NFL agreed to let casinos advertise in football stadiums, but only if the casinos don’t offer sports betting other than on horses or dogs.
Still, New Jersey – which seeks to emulate Nevada’s wager-based success – may be headed for a showdown with the NFL. Gov. Chris Christie said last month that he would defy the federal ban on sports betting, following a referendum in November in which state voters overwhelmingly backed sports wagering. He has promised to enact regulations in time for residents to bet on NFL games this fall.
“Let them try to stop us,” he defiantly told reporters in Atlantic City.
The European experience also shows that online gambling can be lucrative for tax-hungry governments. In the year ending in March 2011, gambling generated $8.9 billion in gross gaming yield in the U.K., population 60 million. About 12 percent of that came from online gambling, according to the country’s Gambling Commission.
Hill PLC, Ladbrokes and Ireland’s Paddy Power aren’t waiting for New Jersey; all three have or have had applications pending for licenses in Nevada.
But European gambling companies may not fully understand how stringent U.S. licensing procedures are. Nevada is holding open hearings on licenses this summer – something the European gambling companies have never before experienced.
On June 7, William Hill was unanimously recommended by the Gaming Control Board for its acquisition. But the company endured sharp questioning from board members who suggested that William Hill may have to end a joint venture with Isle of Man-based Playtech, a London-listed software company. That firm is 45 percent owned by Teddy Sagi, an Israeli billionaire who was convicted of securities violations in his home country in 1996.
“It goes down to every check you write, every withdrawal, down to the most immaterial matter, they go through with a fine-toothed comb,” Gavin Isaacs, chief executive of Las Vegas-based Shuffle Master, told GamblingCompliance earlier this year.
“It’s a very invasive process,” he said of the scrutiny. “There aren’t a lot of people willing to go through with that. So, good luck to them.”
• David Altaner, an American journalist who works for GamingCompliance.com, reported from London. Contributing were Nevada Appeal Capitol correspondent Geoff Dornan, news editor John R. Kelly and The Associated Press.